Wall Street has an answer to 60/40 — this ETF crams 90/60 into the same dollar: One Big Investment Idea

Wall Street has an answer to 60/40 — this ETF crams 90/60 into the same dollar: One Big Investment Idea

Jared Blikre

Thu, August 20, 2026 at 4:55 PM GMT+3 4 min read

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ETFs used to track markets. Now they're engineering outcomes.

That can mean stacking more exposure into each dollar, turning market moves into income, cushioning losses, or magnifying a bet.

Take the WisdomTree US Efficient Core Fund (NTSX). It allocates roughly 90% of its assets to US stocks, using Treasury futures to add another 60% of bond exposure.

In effect, every $100 invested provides about $150 of market exposure — $90 in stocks and $60 in Treasurys.

The trick is that futures don't require the fund to put up the full value of the bonds. A smaller amount can serve as collateral, leaving most of the money available for stocks.

It's the same dollar of capital. It is not the same amount of risk.

And there is a big reason investors might be interested in reworking the old 60/40 formula of allocating 60% to stocks and 40% to bonds.

Long-term Treasurys still haven't recovered from their historic sell-off. The iShares 20+ Year Treasury Bond ETF (TLT) remains roughly 50% below its 2020 peak, another chapter in the breakdown of the old assumption that bonds will reliably cushion stock market losses.

Todd Sohn, CMT, chief ETF strategist at Baird Strategas, describes one appeal of capital-efficient ETFs — funds that use futures or other derivatives to layer additional market exposure onto the same pool of capital — as avoiding the need to sacrifice as much portfolio "bandwidth" to bonds.

In plain English, instead of carving $40 out of a $100 portfolio for bonds, derivatives can layer some of that exposure on top.

The idea isn't new. NTSX launched in 2018. But it is part of a much bigger evolution in how ETFs are being built.

The old question was what do you want to own?

Increasingly, another question belongs beside it:

What do you want your money to do?

The menu is getting longer.

Capital-efficient funds can squeeze several exposures into the same investment dollar. Covered-call strategies can exchange some future upside for income. Buffer funds can trade some upside for protection. Leveraged and inverse ETFs can magnify or reverse a daily move.

And one of Wall Street's newest answers is growing remarkably fast.

Autocallable ETFs aim to pay high income as long as the market doesn't fall too much. Many of the underlying trades keep paying while an index stays above roughly 60% to 70% of where it started.

They essentially didn't exist in ETF form before mid-2025. Currently, autocallable ETFs hold roughly $4 billion, according to Baird Strategas — already closing in on the roughly $5 billion held by the older capital-efficient group.

The catch comes in a deep sell-off. If the market finishes below that safety level, investors can take losses much more like they would owning stocks directly.

The income isn't free. It's payment for taking that risk.

That's the broader lesson across these products. The ETF can engineer a different result, but it can't make the trade-off disappear.

Sometimes that trade-off becomes obvious only after the market changes direction. Barron's highlighted a buffer ETF that lost only 7.6% in 2022, versus a 19.4% drop for the S&P 500 (^GSPC). The protection worked. But over the following three years, the fund gained about 47% versus roughly 70% for the index as its upside caps held it back.

Leveraged funds have another wrinkle.

Because their exposure resets every day, a choppy market can leave an investor with a very different result from simply doubling an index's longer-term return — a risk Sohn explained on an episode of Yahoo Finance's Stocks in Translation.

Capital-efficient funds face their own version. Adding exposure can be powerful when the pieces diversify one another. It can hurt when they fall together, as stocks and long-duration bonds did in 2022.

So a simple ticker can now hide a fairly complicated engine.

Before buying one of these ETFs, three questions can go a long way:

• What exposure or payoff is this fund actually creating?

• What am I giving up to get it?

• What happens when the market moves against the strategy?

Sohn offered an even shorter rule during an earlier Stocks in Translation discussion of leveraged ETFs.

"This is where reading the label matters."

Jared Blikre is the global markets and data editor for Yahoo Finance. Follow him on X at @SPYJared or email him at jaredblikre@yahooinc.com.

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